Satellite imaging startup Planet Labs (NYSE:PL), after years of disappointing returns despite ample investor interest, has finally had a stellar year in 2025. Rising more than 300 percent over the last 12 months, Planet Labs capped off its run this year by posting a gain of over 65 percent in just the last 30 days. Why did Planet Labs rally so much this year, and what could be ahead for the promising startup?
Planet’s Booming Performance
Planet’s most recent rally can be attributed to a better-than-expected earnings report for Q3 of the 2026 fiscal year, which was released on December 10th. Quarterly revenue hit a record of $81 million, up 33 percent from the year-ago quarter. Meanwhile, Planet’s backlog rose by over 200 percent to $734 million.
Although Planet is still losing money, the business has become a positive generator of free cash flow. In the nine reported months of this fiscal year to date, Planet Labs delivered $55.2 million in FCF. On a non-GAAP basis, the business is also extremely close to its breakeven point. Q3’s GAAP net loss, however, remained significant at $59.2 million.
For Q4, Planet is projecting revenue of between $76 million and $80 million, bringing the yearly total to roughly $300 million. Non-GAAP gross margin for the year, meanwhile, is expected to come in at 57-58 percent, with adjusted EBITDA projected to fall between $6 million and $8 million.
It’s also worth noting that this positive earnings report wasn’t an anomaly but a continuation of a broader trend the business has established. A glance at PL’s chart over the last year shows distinct spikes in share prices after each of the last three earnings reports. The positive results Planet has been able to consistently deliver in 2025, building on what has now become a 16-quarter streak of revenue growth, have sent the stock steadily higher after multiple years of stagnation.
Planet’s Future Potential in an AI-Driven World
In addition to its current performance, it’s also important to consider the significant runway for growth that Planet Labs could still have in front of it. Much of the business’s potential value stems from its massive library of satellite images, which Planet itself estimates at a size of 50 petabytes. Planet has been imaging the entire Earth each day for several years, and acquisitions of other businesses have pushed its image archive back as far as 2009. As such, Planet owns an enormous repository of valuable data that no commercial competitor can reproduce.
Needless to say, AI has greatly increased the value of this already significant asset. Planet has rolled out AI tools to enable customers to gain deeper insights from its trove of data, and the potential of AI when applied to Planet’s images has even led to a high-value contract with NATO for cutting-edge surveillance.
As AI tools keep improving, it’s likely that Planet will see more and more demand for its data stockpile. In addition to its existing trove of images, Planet’s satellite fleet also boasts a high revisit rate, allowing it to stay ahead of competitors when it comes to generating new images. Between this and the edge it already has from its large library of existing images, Planet appears to have a strong moat in the increasingly valuable geospatial imaging market.
The addressable market for Planet Labs is also potentially massive. As already evidenced, whole-Earth imaging is in significant demand from government and military entities investing in next-generation surveillance and defense. On the commercial side, however, Planet’s images could also be extremely valuable for businesses seeking insights on everything from agriculture to shipping.
Has the Rally Left PL Overvalued?
While Planet Labs stock finally seems to be taking off after years of failing to live up to its potential, it’s far from unreasonable for investors to be concerned about PL’s valuation in the wake of this year’s gains. Shares of Planet Labs currently trade at over 20 times trailing 12-month sales and over 168 times operating cash flow. PL has also pushed slightly beyond the consensus price target of $18.59 offered by analysts, with the most recent price of $19.36 implying a downside of about 4 percent.
Even with the stock’s high price, though, institutional investors haven’t been dissuaded from increasing their positions as PL has marched steadily higher. Since late 2024, institutional buying activity has significantly outweighed selling. Over the last six months, institutional buyers have purchased over $275 million worth of PL shares, compared to only about $175 million worth of selling. Planet’s institutional ownership rate today is nearly 65 percent.
Is Planet Labs a Buy Today?
Right now, Planet Labs seems to be cashing in on years of technological development that have put it at the forefront of its field. With new AI and machine learning tools to make better use of its data, Planet has found itself in the leading position of a deeply valuable market for geospatial image data. As shown by the surge in its backlog, Planet is actively attracting valuable customers that could help it lay the groundwork for long-term financial success.
It’s important to understand, though, that PL’s price could make it fairly risky. With significant forward growth priced in after this year’s results, management will have to keep delivering high rates of revenue expansion and working toward sustained GAAP profitability. The fact that Planet has run up in association with the general trend of soaring AI share prices could also put it at risk of an AI selloff. It’s worth noting, however, that Planet’s $677 million cash stockpile could go a long way toward helping it weather temporary challenges.
Ultimately, Planet Labs looks like a risky stock that could pay off now that it has finally reached a critical threshold of growth. While today’s investors have to contend with a somewhat high valuation, the long-term potential of the business could make it a worthwhile buy for those with an appetite for high-risk, high-reward investments.
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